Melb terrorist was known to federal police

The lone terrorist who murdered a man in Melbourne's Bourke Street was known to authorities for his radical views and had his passport cancelled amid concerns he would travel to Syria, federal police say.

On Friday afternoon, 30-year-old Hassan Khalif Shire Ali pulled up in Bourke Street in his four-wheel drive containing gas cylinders turned to their open position in what police said was a failed plan to cause an explosion.

The Somalia-born Shire Ali stabbed three men, with 74-year-old Italian restaurateur Sisto Malaspina dying at the scene and two others now recovering in Royal Melbourne Hospital.

During the attack, police and civilians tried to subdue Shire Ali before a new police member, only three months out of the academy, shot him in the chest. Shire Ali died in hospital.

An unnamed man who tried to topple the attacker by ramming a shopping trolley at him told the Seven Network "I've ran and threw the trolley straight at him, got him, but didn't get him down."

Police are confident the event was a terrorist attack, which Islamic State has claimed responsibility for.

Australian Federal Police acting Deputy Commissioner Ian McCartney told reporters on Saturday that Shire Ali was known to have held radical views and that his passport was cancelled in 2015.

He said it was believed Shire Ali was "inspired" by Islamic State rather than having direct links with the organisation.

"The assessment was that person was not a threat at that time," Mr McCartney said.

"Obviously, a focus of the investigation will be ... how and why and when and where he moved along that path of radicalisation."

Police confirmed in a statement that joint counter terrorism team investigators executed search warrants at two addresses in Werribee and Meadows Heights on Saturday morning.

Premier Daniel Andrews said he had been briefed by police and intelligence agencies including ASIO.

"This person (the attacker) was as much on a list because of his familial connections and others that he associated with as he was for any conduct that he had been involved in," he said.

"No history of violent offending, and I wouldn't go any further than that."

Mr Andrews said he had not received any advice that security measures in Bourke Street and surrounds needed to be boosted.

Melbourne Lord Mayor Sally Capp thanked police for their fast action in minimising harm and reopening the area for public use on Saturday morning.

When asked if police should have shot Shire Ali in the leg rather than the chest, Mr Ashton said police were trained to kill if they believed their life or a member of the public's life was at risk.

"We don't train people to wound people with firearms," he said on the Today Show.

"You're trained to shoot to kill, not to shoot to wound."

Mr Ashton also said there was no known link to James "Dimitrious" Gargasoulas, who is currently on trial facing six charges of murder after allegedly mowing down pedestrians on Bourke Street in January 2017.

Results of a post-mortem examination on Shire Ali's body are expected to be available in a few days time, when investigators will be able to comment on whether he was drug-affected.

Victorian Opposition Leader Matthew Guy said "blood on the streets" should not become a standard occurrence in Melbourne, as he called for "stronger laws" to keep the city safe.

"My view is clear: that those who are repeat violent offenders should be subject to a mandatory minimum jail time and if they're not an Australian citizen, they should be deported."